Pitfalls of Rent-to-Own Appliances and Furniture

When you've needed appliances or furniture, you used to only have two options. Either you'd save for a time and buy them outright, or you could finance, which would only be possible after an extensive credit check and may not result in favorable outcomes for everyone. Now we live in a time when the notion of instant gratification for all things is upon us. There are services available where almost any product can be delivered to your doorstep within a matter of days or even hours. It's given some a sense of entitlement that encourages them to explore options to circumvent time-tested ways of purchasing white goods or furniture. An industry that has been growing to take advantage of eager yet unsuspecting consumers: rent-to-own shops.

Renting to own can appear to be an enticing prospect. At first glance, the relatively low weekly or monthly payments are advertised to be well within anyone's budget. The need for a credit check, the biggest obstacle to most people who would want traditional financing, is removed almost as if by magic. Normally all that's required is a proof of residence and income, and a few personal references. These are only given the most cursory of examinations. The appliance or piece of furniture can be in the renter's possession the same day, satisfying a desire and giving them that elating rush of dopamine.

Once the initial euphoria wears off, though, that's when the drawbacks arise if you hadn't been paying attention. If you do some research and run the numbers on the payments and length of contract, renting to own can ultimately cost up to 300% above the item's retail price. This is the best-case scenario. If you decide to return the item, companies normally charge an exorbitant "repossession fee" in addition to the fact that the money you'd spent thus far is essentially wasted with nothing to show. You'll shudder to think what happens if you fall behind on payments. If you miss a payment and still want to continue renting the item, you'll be assessed a late fee which can equal your normal weekly/monthly payment. If you miss as few as two or more payments, you'll be on the hook for any outstanding payments, cumulative late fees, repossession fees, and the company will reclaim the item. Worst of all, these companies will not hesitate to report you to a collection agency. This would be disastrous for your credit.

Let's look at an example scenario to further illustrate the point. Appliances Connection sells this Maytagwasher and dryer set that consists of a MVWB835DW 28" Top Load Washer and a MEDB835DW 29" Electric Front Loading Dryer. The washer has a PowerWash Cycle, which uses extra cleaning action in tandem with heated water to remove stubborn stains. The dryer has 10 drying modes with 5 temperature settings to tackle pretty much any drying job you can throw at it. With 5.3 cu ft and 8.8 cu ft capacities respectively, this pair is perfect for a mid-sized family home. We sell it at a bundle price of $1608.20. We examined the pricing structures of two of the leading nationwide rent-to-own outlets. One charges $29.99 per week over the course of 130 weeks or 2.5 years for a total of $3898.70. The other charges 164.99 per month over the course of 24 months or 2 years for a total of $3959.76. With each of these plans, you'll be paying, at minimum, two and a half times more than buying the set outright from Appliances Connection. As for the additional fees that were referenced before? This is a case where rent-to-own companies can take advantage of America's byzantine regulatory laws. Because these transactions aren't considered to be formal loans or extensions of credit, the companies are not subject to disclosure laws and oversight under the "Truth in Lending" Act. Moreover, there are currently no consumer protections for customers who feel they have been victims of exploitation by rent-to-own schemes. The hidden costs imposed by these companies were made public through formal complaints to the Federal Trade Commission and the Better Business Bureau.

There are certain narrow circumstances in which people can find appliance and furniture rental advantageous. Those with temporary short-term rental situations who don't want the expense and/or effort of repeatedly moving large items between residences might come out ahead. Even then, it's imperative that they ask all pertinent questions before signing a contract and that they are fastidious in keeping up with payments. If your intention is long-term ownership of appliances and furniture, almost any other option, even purchasing items with a high-interest credit card, would be better than falling prey to rent-to-own companies.